Final answer:
In decentralized organizations, decision-making authority is spread throughout the organization to empower various levels of employees, encourage responsiveness, and increase accountability.
Step-by-step explanation:
In decentralized organizations, decision-making authority is spread throughout the organization. This means that rather than having decisions be confined solely to a small group of top executives, the power to make decisions is delegated to various levels of the organization, including department managers, team leaders, and other employees. This structure allows for more involvement by various individuals in the decision-making process and can lead to increased motivation and accountability as well as faster responses to changing conditions and customer needs.
However, it may also lead to higher transaction costs due to the increased need for coordination among different decision-makers. For instance, it could require more meetings, discussions, and the need to reach consensus, which can slow down the process. Conversely, centralized organizations operate with decision-making authority tightly held by a few top executives, leading to a more streamlined decision-making process, albeit with decreased independence for lower-level managers and potentially slower responses to department-specific or local issues.